Bishkek offers KyrgyzGas to Gazprom for $1

By bne IntelliNews December 21, 2012

bne -

The Kyrgyz government has invited Russia's Gazprom to buy 75% of its debt-ridden gas distribution company KyrgyzGas for a nominal price of $1. The offer comes after a week of gas shortages and power outages across Kyrgyzstan, which relies on natural gas imports from its neighours Kazakhstan and Uzbekistan.

Prime Minister Zhantoro Satybaldiyev confirmed the offer, made during a round of talks between Gazprom and Kyrgyz officials on December 19 and 20. Bishkek hopes that the Russian gas giant will help KyrgyzGas settle its millions of dollars in outstanding debts as well as reduce the country's dependence on gas imports, Kyrgyzgas deputy director general Kuralbek Naskeyev said on December 20, according to RIA Novosti.

While the country does not currently produce its own gas, Gazprom has announced plans to develop natural gas deposits at Mailuu-Suu-IV and Kugart in southern Kyrgyzstan, for which it was issued licences in 2008. However, work seems to have stalled for the time being. The Russian giant has also been in talks over acquiring KyrgyzGas for several years.

Investment into the country's dilapidated distribution infrastructure is also urgently needed. Meanwhile, KyrgyzGas is also planning to build a pipeline in northern Kyrgyzstan as part of a route that will transit gas from the Caspian to China, which will offer the country access to those flows for itself.

Domestic gas supplies were cut off in most districts of Bishkek on December 14, after exports from Kazakhstan were reduced and Uzbekistan halted sales to Kyrgyzstan altogether due to its own energy crisis at home. An estimated 80% of residents found themselves cut off during the coldest period of the year so far. As residents switched to electric heaters, the over-loaded electricity grid was unable to cope, resulting in blackouts affecting around 50% of the city's population. According to Kyrgyzstan's Ministry of Health, 16 people died of exposure during the first 19 days of December, Kabar reported.

While the crisis has now abated thanks to a hike in Kazakh exports, Kyrgyzstan's already wobbly coalition government has come under fire for its failure to resolve the problem sooner.

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